Help to Buy

Update

The Mortgage Guarantee Scheme will close to new loans by the end of 2016.

Help to Buy is a government scheme for those who have a small deposit, when buying a home. Have you at least a 5% deposit? If so, you could use the Help to Buy scheme through:

Equity loans – available to first-time buyers and existing homeowners who want to buy a ‘new build’ house. The purchase price must be no more than £600,000.
Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have a 5% deposit.
If you live in London, you can borrow up to 40% of the purchase price.
The scheme is available until 2021.

Mortgage guarantees – available for new and old properties across the UK. The government undertakes to cover any of your mortgage lender’s losses as a result of any problems you might have in paying it back. However, you are still responsible for keeping up your mortgage repayments on a Help to Buy scheme in exactly the same way as any other mortgage.
The scheme is open until 31 December 2016.

With both schemes there are limits on the cost of the property you buy. These limits differ across the UK.

Right to Buy/Right to Acquire

Right to Buy is for tenants in England, Wales and Northern Ireland who rent their home from their local council. It allows tenants, who qualify, to buy their home at a discount. The size of the discount varies depending on where you live and the type of property you want to buy.

Tenants who were living in council homes before it transferred to another landlord such as a housing association, may be eligible to buy their home under the ‘Preserved’ Right to Buy or Right to Acquire schemes.

In most cases, tenants will need to have rented from the public sector (i.e. local council or housing association) for three years before they can buy under these schemes.

The three years can be non-consecutive, so tenants who have rented from the private sector in the middle of a total of three years renting from the public sector, can still qualify.

In 2016, the Right to Buy scheme is getting extended to include housing association tenants in England.

This extension is starting out with a small number of housing associations in certain areas. It will then be rolled to the rest of England over the year. For more information, visit the Right to Buy website.

In Scotland: the Scottish Government plans to end the scheme for all council and housing association tenants in Scotland, but there are other schemes available.

Right to Acquire is a scheme offered in England and Wales for housing association tenants who don’t qualify for Right to Buy. The discounts are slightly smaller.

In Northern Ireland this scheme is called the House sales scheme and is for tenants who rent from the Northern Ireland Housing Executive or a housing association. Find out more on the nidirect website.

Shared ownership

Shared ownership is where you buy a share of a home from the landlord, who is usually the council or a housing association, and rent the remaining share.

You need a mortgage to pay for your share, which can be between a quarter and three-quarters of the home’s full value. You then pay a reduced rent on the share you don’t own and you have the option later on to buy a bigger share in the property up to 100% of its value.

The eligibility restrictions on the shared ownership have lifted. So, from April 2016 anyone who has a household income of less than £80,000 (outside London) or £90,000 (inside London) can buy a home through shared ownership.

Only military personnel will be given be priority over other groups. The scheme will apply across England.

Co-Ownership in Northern Ireland

This scheme is exclusive to Northern Ireland and is available for both newly built and older homes. You buy between 50% and 90% of the property (known as the ‘starter share’) and can increase that share at any time (known as ‘staircasing’). You pay rent on the portion you don’t own.

First Steps London

This scheme aims to help low and modest income earners buy or rent at a price that’s affordable. You part buy and part rent the property – mostly for newly-built homes but some resale properties are included. There are eligibility criteria around earnings and you can’t buy a home on the open market.

Scotland

Wales

The Homebuy scheme offers help by providing an equity loan (30% increasing to 50% of the purchase price), and is designed for people who would otherwise need social housing. The loan can be repaid at any time before the property is sold, but if you sell the property then it must be repaid at that point.